What Is a Price Point: Meaning, Examples & How to Use It (2024)

FAQs

What Is a Price Point: Meaning, Examples & How to Use It? ›

Price Point Definition

All you need to keep in mind is that a price point refers to a hypothetical, potential price. For example, you might predict that you'll be able to sell 1000 T-shirts at a £5 price point. Whereas the price is the actual price it sells or sold at.

We were impressed by how well the lens handled low light given the price point. Still, at the price point, having to use more throughout the day is hardly a concern.

Price points vs price

A price is the final retail or selling price — the price a customer pays when they purchase an item. Meanwhile, a price point is a possible price a company is considering. A product can only have one selling price at any given moment, but it may have numerous price points.

At its most basic, a price is the amount of money that a buyer gives to a seller in exchange for a good or a service. When someone hands over $2.00 and receives a pound of tomatoes, the price is straightforward observation: $2.00 a pound.

The right price point for a product is the price that allows you to maintain the highest sales volume at the maximum profit margin. In other words, it's the price that allows sellers to achieve a balance between what customers are ready to pay, and what helps them reach their business goals.

Example of a spot price

In forex, the spot price is sometimes referred to as the spot rate, and it is the quoted exchange rate between two currencies in a forex pair. For example, if the quoted exchange rate for EUR/USD was $1.2354, then that is also the spot rate.

Point-of-use (POU) devices treat water from a single outlet, faucet or fixture. A POU device is installed to reduce contaminants in the drinking water at one tap, such as a kitchen sink.

Examples of point in a Sentence

He made a very good point about the need for change. Let me make one final point. That's the point I've been trying to make. “What's your point?” “Actually, I have two points.” My point is simply that we must do something to help the homeless.

Essentially, a price point represents a point on a scale of possible prices. On a hypothetical demand curve, there are multiple price points that represent different levels of demand and, therefore, profit.

How to set a price point? ›

Price Points

Pricing experts will encourage businesses to move a price up to the next a key price point. These are numbers, or points, where a business can earn more profit without giving up many sales.

Examples of price in a Sentence

Noun You paid a high price for the car. We bought the house at a good price. The price of milk rose. What is the difference in price between the two cars?

Average Price Point Example

If your company sold three units of a good at $20, five units at $15 and 10 units at $10, total sales equaled $235 for the period. If you divide the total sales by the 18 total units, your average price per sale was $13.06.

Instead of basing prices on what the customer is willing to pay, businesses set prices by determining the cost of production and their ideal profit margin. For example, if a product costs $100 to make and a company's target margin is 15%, then the product will sell for $115.